January 22nd, 2012
Econintersect: In what is one of the most astounding changes of direction in history, the paragon of balanced budget fiscal policy (the International Monetary Fund) has issued a warning most unexpected. The statement was made jointly by the IMF, the World Bank, the World Trade Organization and eight other organizations. Christine Lagarde (pictured), head of the IMF, warned in the statement that the world faced 'significant and urgent challenges'. The statement warned about the economic and social risks of austerity programs. Instead this was a "call to action" designed to boost growth and fight protectionism. Policies are needed to create jobs, tackle inequality and green the global economy. The descriptive phrases are those used in an article in The Guardian.
The statement is a form of keynote in advance of the World Economic Forum annual meeting to be held this week in Davos. The Guardian provides an excerpt from the statement:
"The world faces significant and urgent challenges that weigh heavily on prospects for future growth and on the cohesion of our societies," said the statement by the global issues group of the World Economic Forum. It was published ahead of the forum's annual meeting in Davos next week, amid concerns that 2012 will see the global economy flirt with recession as a result of the eurozone crisis.
"Our shared objective is the strengthening of growth, employment and the quality of life in every part of the world," said the statement. "But entering 2012, we worry about: decelerating global growth and rising uncertainty; high unemployment, especially youth unemployment, with all its negative economic and social consequences; potential resort to inward-looking protectionist policies."
The statement referred to “more than 200 million people unemployed around the world,” the need for “boosting jobs and investing in human capital” and providing “tangible improvements in material living standards and greater social cohesion.”
This is pretty radical stuff from the bastion of fiscal conservatism, but global leaders are running scared. The joint statement came just two days after the World Bank warned the world is “on the cusp of a global recession that could be as bad as the crisis four years ago.” (CNN Money)
The signatories of the statement were:
- Christine Lagarde, International Monetary Fund
- Robert Zoellick, World Bank
- Pascal Lamy, World Trade Organization
- Mark Carney, Financial Stability Board
- Margaret Chan, World Health Organization
- Angel Gurría, Organisation for Economic Co-operation and Development
- Donald Kaberuka, African Development Bank
- Haruhiko Kuroda, Asian Development Bank
- Luis Alberto Moreno, Inter-American Development Bank
- Josette Sheeran, United Nations World Food Program
- Juan Somavia, International Labour Organisation